The Third Way: Decision 3-How to Innovate?

.....this blog will focus on decision three of The Third Way-deciding how the organization will innovate.

At first glance, this decision seems to be pretty straightforward. However, once a company or organization like a nonprofit decides what its core or primary offering, product or service is and determines what the complementary products, services, and offerings it will introduce to enhance the value of the core/primary ones, the choice of how to innovate can actually be harder than one would surmise.

For example, what are the strengths of the company? Is it a company blessed with a heritage of new creative solutions to problems, is it an intensely focused operating company-focused on the tried and true versus new business development. Is the culture strong for innovation and is there a stable base of stakeholders clamoring for more innovations? Can the organization amass momentum inside the organization to bring new innovations to the market...or would it be better to partner with another organization which has the skills and processes for such invention, and maybe a trusted potential partner?

These types of decisions are admittedly subjective. They are not easy to quantify and know for certain what is the best process and structure for the types of innovations that the complementary products and services must possess to truly bolster the core product/services benefits and features. Decisions such as the time period and the nature of the offerings, any budget considerations and political or market dynamics also play a role in making the best choice for how to innovate in The Third Way.

When thinking about the model proposed in The Third Way, it's easy to assume that this is more like a sustaining innovation than a disruptive one. It's likely to introduce innovations that have a high degree of working within the context of the core offering and are somewhat defined by the rules and characteristics that define the core product or service that the innovation is to enhance. Thus, the remarkable low-end innovation or the market-creating innovation is less likely to emerge from the innovation process and what will be created is much more prone to be something that will be confined somewhat by the needs of the core product that the innovation is set up to complement.

Most companies are shaped by the strong management systems that are in place. This is one of the major premises of the theory of disruptive innovation and it plays a huge influence on whether or not an incumbent organization can bring a truly disruptive innovation to market. Exceptions do exist-Apple/iTunes/iPhone, Circuit City/Car Max and Sabre Systems/American Airlines are examples. They are few and far between, however.

In the end, part of the popularity of The Third Way is that it plays to the strengths of well managed and heavily formalized process-driven companies. And the most likely choices that will abound for The Third Way with such companies will be due to the companies proclivity for developing and introducing innovations in a way the companies understand-through a structured repeatable process.